CFPB: Credit card complaints decline in 2013
Federal database, in 2nd year, finds less griping to regulators
By Fred O. Williams | Published: January 27, 2014
Complaints about credit cards filed with the federal consumer watchdog fell by 16 percent for 2013, and most of the largest issuers saw declines, according to data compiled by the U.S. Consumer Financial Protection Bureau.
The chart at right shows the complaint totals logged with the agency for the top 10 complaint-getters in 2012 and 2013. The 11,700 complaints aimed at the 10 companies last year made up 91 percent of the total complaint volume. Only American Express and U.S. Bancorp saw their CFPB complaints increase.
Are the card giants getting better at keeping customers satisfied? Maybe so, but that isn't the only possible reason for the reduced grumbling.
The results may be part of a longer term trend, as the increasingly healthy economy gives card users fewer reasons to be grouchy, said Jim Miller, senior vice president of banking services at J.D. Power and Associates. Customer satisfaction is improving "the further away we get from the recession and people not being able to pay their bills," he said. J.D. Power's surveys show that customer satisfaction with card companies has been growing since 2011 as defaults on card debt declined.
In addition, the CFPB has begun taking complaints about credit reporting bureaus and debt collection agencies, siphoning off complaints that had previously been aimed at card issuers. In the card sector data, complaints about credit reporting and debt collection issues plunged by more than half in 2013.
The gripes logged at the CFPB are a fraction of the numberless complaints heard by customer service workers at card banks. But the regulator's detailed -- and public -- accounting provides a map of the hottest friction points between card companies and consumers. After receiving a complaint, the CFPB contacts the company to get its response and keeps track of what the problem is about and how it is settled. Finally, it tracks whether consumers agree with the company's response or dispute it.
How they hand out relief
The major card banks differed widely in how they resolved complaints in 2013. Offers of "relief" -- either a credit or a nonmonetary correction of a problem -- ranged from a low of 19 percent at Bank of America to 48.4 percent at GE Capital Retail. Other than offering relief, card issuers may respond with an explanation of their stance.
Handing out lots of relief to consumers may look evenhanded, but it's a double-edged indicator. A company that's generous about making corrections and giving credits could be experiencing a high rate of mistakes in the first place. GE Capital's CareCredit unit paid a $34 million settlement to the CFPB over marketing of its medical cards in 2013, and it is a major player in deferred interest store card deals, which have come under CFPB scrutiny as an expensive pitfall for unwary users.
Companies that are more generous about applying grease to squeaky wheels have less friction with customers over how complaints are handled. In preliminary results for 2013, GE Capital had the lowest rate of customer disputes of its resolutions, at 14.5 percent. This category is not complete for 2013, as company responses and disputes are still being logged. The highest preliminary dispute rate went to Chase Bank, at 27.4 percent. Chase was also relatively tightfisted with relief, giving concessions to only about one-fourth of disgruntled customers.
The root of card
The problems people had with cards shifted during 2013, with complaints about "APR or interest rate" falling by 52 percent. Complaints about credit reporting also plunged, down 35 percent, as a separate complaint product category for credit reporting companies was added in October 2012.
The category, "identity theft/fraud/embezzlement" rose to the No. 2 complaint, from No. 5 in 2012, although the sheer number of complaints about the issue fell about 5 percent.
Miller said J.D. Power's consumer surveys show that people are getting rubbed the wrong way more frequently by rewards programs and late fees, which are relatively small concerns in the federal consumer bureau's complaint data. Ad campaigns by card issuers taking aim at competitors' complex rewards programs and offering to waive first-time late fees may be raising people's awareness of those issues, Miller said.
"Card companies are competing heavily around rewards," he said.
At the time of J.D. Power's latest survey in September, problems with unauthorized card use were declining. "It will be interesting to see what happens with that," he said, following high-profile data breaches at Target and Neiman Marcus in November and December.
See earlier story: 2012 credit card complaints reveal trouble hot spots
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